After coming off a halt, Green Mountain (GMCR) is blasting off in response to news the company has formed a long-term alliance with Coca-Cola (KO) that will result in the latter acquiring a 10% stake in the former.
Green Mountain will be Coke's exclusive partner for "the production and sale of The Coca-Cola Company-branded single-serve, pod-based cold beverages." The companies will also "explore other future opportunities to collaborate on the Keurig platform."
Green Mountain's Keurig Cold single-serve beverage system, which will support Coca-Cola pods, is expected to launch in FY15 (ends Sep. '15). The system will make "carbonated drinks, enhanced waters, juice drinks, sports drinks and teas."
Coke is buying Green Mountain shares at a price of $74.98. Based on AH levels, the company is already staring at a 49% profit.
Though investors are naturally focused on other matters, Green Mountain is guiding for FQ2 EPS of $0.93-$0.98, below a $1.02 consensus. Y/Y sales growth is expected to be in the low-to-mid single digit range; the consensus is for 8.1% growth. GMCR's guidance excludes a 4% dilutive EPS impact from the Coke deal.
FY14 EPS is expected to be in a range of $3.75-$3.85 vs. a $3.82 consensus. Sales growth is expected to be in a high-single digit range; the consensus is for 8.4% growth.
KO +0.6% AH.